security industry, financial market association. it was i don't need a hobby. but it's my work, my firm's work and i welcome any comments and question on it. if there's anything wrong with it. we'll put out a corrected version. it was an attempt to be constructive and look across the framework of rules to see how they might fit together. we looked a the operational impediment to acting on rules. assume for the moment every unintended consequence of each of the rule in the map is wrong. could all all of the rules that deal with the evil banker hypothesis and couple of them be implemented? and i think the answer there is no. we have an ideal of global account and global capital rules. we strong global accounting rules. we don't have the extraterritorial rules of the road. we don't have key fundamental

tenets of working make a lot of rules work. let alone the super vision and the capacity to ensure they do. so what are the priorities? in my opinion, first they're finalizing the orderly liquidization authors. and the thirty paper takes a hard look at this to see if it is a robust end too big to fail. ..

to whatever piece is the right to the agency that it can be resolved. if it too complex, dodd-frank tells the agencies can you go come you tell the same complex banks. no more cross-border bridges. structures often subsidiaries that are more easy to resolve. we need to hold regulators accountable for acting on living wills said the big bang sorry so i requires make more resolvable, not step away if it won't happen, let's do something else from which no one agrees than few specifics are getting hand. orderly resolution they think is important and vital. new capital rules, new liquidity rules and a keen eye to operational risk management, all of which can be best insured, not only by new rules, but by tough standard good hold corporate boards of directors at

the top in senior management very accountable for ensuring institutions take no more risk than they can afford on their own. thank you are a match. [applause] >> i promised each of the panelists a brief follow-up statement. so why don't we start perhaps in the same order the presentations were given. scheherazade come if you'd like to add anything. >> i think you got the general gist that we don't know when the next is coming from and we are not ready. i think i'd just like to emphasize that. there's things we can do to understand risks because there's a nuance of risk that is shifted and the market's perception and reaction to that risk. its more visceral, faster, the damage is much more than we know the next time this thing happens it happens for real, like simon

said it's been reiterated, is going to be much worse. sorry. >> and. >> first topic that the papers put together a really wonderful and comprehensiveness and clarity and am really highlighting that there are so many unintended consequences and so many crosswinds come even within the rules that have been adopted in those that are yet to be finalized, that it does create a great deal of complexity risk, even if one accountable board wants to do the right thing. at this point can we find there so many boards struggling and spending so much time simply trying to understand the interplay of the rule. and lastly, on the operational difficulties, were introducing quite a number of new entries if you will into the system through

dodd-frank, whether it's the clearing -- the central claim, and i think were all sort of understating the complexity that's involved in handling all of these and then being prepared to sort of flip the switch, even if it's phasing to do away for real great confidence in. >> simon. >> through small follow-up points. too many of us, and not coming to participate in these discussions coming up at a various radio tory hearings, the complexity of the current regulations looks very much like the outcome of an enormous amount of industry lobbying and assistance on the complexity and a lot of added rules. for example, around the vocal role. he said now is so i'm complex unworkable. if you say excuse me and several other americans for feeling, for

feeling the industry is playing a deep, clever and wrong political strategy. then prove me wrong. if this is the result of karen's work, change his attitude and becomes cooperative with the ftc or the fdic or any other agency and really shifts away from this incredibly obstructive lobbying, that would be huge and terrific and i'd be happy to write about that offer. two points for caring. i read your papers and i think they're very clear and forthright and you should be commended. but two questions come to me. first of all, do you agree that under current circumstances and current market perceptions, that very large bank holding companies can borrow more

cheaply than is the case for smaller and medium-sized things and this may well be due, according to people like richard fisher and sheila bair, may well be due to the continuing perception that they're too big to fail. and the second question to you but they did as i understand your points about order of liquidation and he said very distinctly just now, please tell me how a global mega-bank that is inherently cross-border with 100 countries, jpmorgan chase, working around the world with a very complex cross-border jurisdictions that in a nicely summarized for derivatives transaction. how will order liquidation actually be implemented by the fdic presented by the treasury when these banks are so large and so complex and there is no

cross-border global resolution authority? >> great questions. first i'll start off by again agreeing with you. the body of law and rule is incredibly complicated. some of that does pertain to the evil banker hypothesis. i'm amended hereby the corollary evil lobbyist hypothesis, but i would add my own cause, which is the cubicle regulator aided and abetted by the expert lawyer hypothesis. and maybe in my practice i spend a lot of time. and the bells of these rules. and when you say okay, i think i had it. here's the definition of proprietary trading. some lawyer will say well, actually there was lawler versus knickerbocker case in 1842 in

which that definition was not upheld -- so for this to be really clear, with another 52 pages in the federal register. that may be good lawyering, but it is incoherent rulemaking. i don't know what to do about it. i just say this is one of my personally favored hypotheses is a big problem of complexity risk and why i go back to a few clear standards to which real institutions accountable, i written on the poker rules mav is hispanic@. we have to make some clear decisions here. this current come in never never land that's largely constructed by people to do the job they've been given a stalling financial markets place. and it's importantly particular to your questions.

we have a square peg come watch as the market perceptions of very big banks remain too big to fail in the round hole of the orderly liquidation authority, which is a flat statutory prohibition in the united states doing so. some people tell me the answer to the contradiction would be that congress would intervene and fix this somehow. if you will find the congress that fixes anything anytime, you let me know. but the law is very clear. could the fed somehow override that barrier and step in? maybe. title 11 and dodd-frank doesn't get a lot of attention. it cars the fdic from doing what he did quite definitively. at the very least it's hard if not impossible. you have this bad situation and more markets are engaging in ongoing moral hazard, accounting

for some of this funding differential that simon rightly references. at the same time, they are plain and morally without the safety net that would save them from their sins, meaning that market shock in the case of either operational solvency or liquidity risk any large institution would be worse. it would be a limit on steroids. what a naco back to irenic liquidation authority. could it work in cross-border situations? definitive work in cross-border situations? not well heard about 80% are held in the u.k. and is particularly true for institutions like jpmorgan. fixer-upper in 70 countries, but they've got in bulgaria is not systemic. maybe in bulgaria it is. that's a different question. those are afterthought

operations. that is why the u.s. in the u.k. are very far wrong and what they call a crisis management group, to resolve the aspect of cross-border banking. is it done? no. should they finish? yes. then i can see her question with a lot more confidence. >> one thing we had to think about really have a talk about is monetary policy has been so accommodative that is distorted risk, returns and it's got to be unwound at some point. that's a great market timing issue and concern, which might be the next crisis. the other thing is what we've all heard today from everybody is dodd-frank is imperfect, but it also has useful elements. it has elements that you think about and how good the days. we need to continue to think about it. the orthodoxy of dodd-frank is the only solution as a scary one

because the world of markets in everything else evolve. if we think dodd-frank is this going to save us from the next crisis, where lake the fridge behind the wine. people go around it. >> simon company talked about monetary fiscal policy. their new book deals with that. you want to give this a short observation? was some interest in the united states on fiscal monetary policy? >> first of all, i would encourage everyone to read the work again on this issue. they have so won the papers if you don't have time, there's a great editorial opinion piece in "the wall street journal" in september 2009 called the blog that ate mandatory policy. they talk about how today to fill financial institution undercapitalized taking a risk, having big losses and operating and zombie formic monetary

policy much more effective when you go into crisis. so while the mechanisms to work. it's a question of what will happen when undercover, assuming we do will recover. how that affect the ability of policy to control the economy and the ability or the impact of various changes in fiscal policy. on our fiscal cliff issues come i would say more like the distraction from the fiscal chaos will see after the election around these issues. what i would worry about is not so much the direct impact on ice, much more the stock markets, much more how it will affect other countries. to take europeans and throw an interest in risk premium globally as everyone got scared in the running running into u.s. treasuries paradoxically because we stabilize expectations of the u.s. fiscal policy. what's that going to do to spread entrance or italy or spain? it's only going to go down.

so our ability to damage the world is very important. i still worry how they come back to us through the financial system and how the impacts is more affect this. i don't think anybody here is evil. they're just doing their job. [inaudible] [laughter] >> i'm not a lawyer and i hesitate to say this in a group of lawyers, but don't lawyers have responsibility to zealously advocate on behalf of their clients? >> that's what we teach. >> within the bounds of the law. >> that the people are doing. i don't know they're evil because we haven't been publicly prosecuted. so it's an interesting question. however -- it's not laptop essays. my hypothesis is people are doing their job in management was acting what they perceive to be the interest of shareholders, the fiduciary duty after all.

that's exactly what you can lead to huge disasters. people doing their jobs and thinking of risks in a certain way. that's a problem. >> i don't think it is their job. what to do in their job due for the shareholder value of washington mutual, waconia? little of any one of the biggest banks which are treating a very small fractions of their book value. everyone of the boards of directors at one of those big banks and every one of the ceos, including some incumbents are not doing their jobs, nor were there regulators. >> i agree. i called for mr. pander to step down two years ago. i read in sheila berry spoke as she felt in october 2008, the stock prices down 9092% during the tenure in that job. where are the board of directors

today? the best we do but it is to break up the banks. again, this is what the bank investor is saying. make them more efficient and get a better shareholder in return. >> if you want an issue to respond a larger scale, in this town they have to be some long-term economic plan of how we're going to manage the debt of the next 10 years. if we don't convey that to the market, we're setting ourselves up again. >> i will conclude by saying that someone was talking about the issue of why the u.s. dollar was the strongest currency in why the treasury is the most sought after global currency. experts said you have to realize that the u.s. may simply be the most attractive in the booth that jury. i think we should try our best to get out of the glue factory. you should be the resolution for the new year. please join me in thanking the

panel for a wonderful conversation. [applause]

>> now, you look at speeches in the european parliament and baking regulation. the nobel peace prize in uk's role in the e.u. the presidents of the european commission and european council addressed members on tuesday of the day for banking supervision and a proposed european banking union. this is about an hour. [speaking in native tongue] transcode the statements by the european council and commission concerning the european council held on the 18th and 19th about over.

and on this now, with words of welcome, i give the floor to the president of the european council, mr. herman van rompuy. >> mr. president, dear colleagues, after a brief but heartfelt noble prize to the european union, which was held by attribute to redouble efforts for the future, to focus of which the european council was on the economic issues. so the compact on growth and job an interim report and monetary union. we also spent time on some foreign policy questions and touched on a matter, which i

know is not the appointment on the board of the european central bank, which was raised by a man by your president at the beginning of the meeting. the union's commitment to promote the equality of women and men is an objective they done in the treaty. yesterday's to buy your economic committee on the appointment is an understandable expression of concern that a great deal remains to be achieved. notably regarding the european central bank. i note also the committee's recognition that the candidates consequences are in no way disputes here for my part, last week's european council, i made a strong appeal to all heads of state of government identified

and oppose female candidates at european level. the economic and financial sectors, with the other representation of women is placed. i underlined that we need to be active in encouraging this process. i hope that this such renewed commitment to gender balance, parliament would base its position on the current candidate on the sole criteria of professional qualification and experience. it is urgent to fill the figure. dear colleagues, now let me move to the economic questions, which were at the core of our discussions. first, growth in jobs. we are still suffering from a lack of growth. 25 million people around employed in the union,

especially among young people. the overall growth projections for next year our best models. i am aware of the told this is ticking on our societies. in several countries, the adjustment is more severe than lengthy that many had object to. and budgetary deficits and competitiveness would have been necessary but even without the crisis in the euro zone. it is therefore all the more necessary to share the burden of this adjustment fairly and to have policies especially targeted at reducing unemployment. and here come in the e.u. instruments should assist us. creating jobs and boosting socially inclusive growth remains our utmost priority in ultimate goal.

the commitments made under the compact for growth and jobs cannot wait. they must be followed by decisive action and translated into concrete results. it's particularly urgent for the implementation of the 120 billion package we agreed in june for progress on the senior market issues and on our e.u. 2020 goals. it is also urgent for supporting social inclusion, developments, developing competitiveness of our industries and harnessing the potential of international trade. in the meanwhile, we will discuss the november the most annual financial framework at the european council. we need to grow the e.u. budget although it represents only 1% of european gdp as an investment budget is a huge impact on

growth. of course, restoring confidence in the year is out as a key part of bringing back internal demand and growth. unless we can now witness the first results of our cumulative actions. i may give a few examples. the so-called spreads are decreasing significantly, in almost all euro zone countries. public deficits are lower in most countries. competitiveness and expert performance are stronger in all countries. upcoming commenting supervisor is a major breakthrough we launched two weeks ago the mechanism for the firewall now amounts to 700 euro. in this specific case of greece, significant progress has been made. the euro zone has a state issued a statement welcoming the determination of the greek government to deliver on its commitments and also commending

the remarkable efforts of the greek people. the root group will examine this progress in the light of the forthcoming report can take any necessary decisions. honorable members, our second major debate was on the interim report, which i drew up in collaboration with the presence of the european commission, the euro group in the european central bank group of four presidents who also met with your president. my office has member states of the european parliament that was contribution and i also personally met some of your coordinators and committee chairs. this was an interim report, seeking to clarify concepts and test the level of support of various ideas that have arisen

with the aim to reach conclusions in the summer. it highlighted points of convergence and outlined areas that would require further work. there has been a mandate to continue this work and propose a specific to represent at the december meeting so that i could move ahead of all the essential building blocks on which genuine emu should be based. our immediate priority was progress on financial integration. in june we agreed to break the vicious circle between banks. the urgent element is setting up supervisory mechanism to prevent banking risks and cross-border contagion from emerging. that's where the european council has to progress with agreeing with the legislative framework by the first of january, 2013. once this is agreed, it could

become effectively operation during 2013. this places a user's possibility on all of us to make these ambitious timelines. we cannot afford the risk of losing momentum. when establishing, several aspects made taking into consideration. first, there must be a clear separation between the responsibilities of the ecb. the ecb should be able to carry out supervision in a differentiated manner, meaning using national authorities and supervisory tasks as much as possible. it will be designed and implemented with the integrity of the markets of financial services in mind. and finally, the mechanism should be inclusive and transparent. all member states are free and invited to join.

these opener should be reflected in the structure with appropriate rights and obligations for all. it is the first essential step towards a complete integrated framework for the financial sector. other steps also need to be taken quickly, starting with harmonizing national resolution and guaranteed schemes following which the commission will propose a single resolution mechanism. as agreed in june, direct capitalization by the europeans debility mechanism would be possible once it has been established. we ask the euro group to drop an exact operational criteria. for a stable come economic and monetary union, we also need frameworks for budgetary methods in economic policies. on both these fronts, we have

heard he done a lot. that may put it this way. if we fully use to force coming to european semester with this country specific recommendations come at the macroeconomic imbalances and stability coordination and governance, then we'll have already taken a major step for its fiscal and. yet, too secured the euro zone's long-term stability, we also need to be able to utter do with the economic shocks that spur economic convergence. here come the summit avenue semi report attracted attention. i received a mandate together with my colleagues to explore them further between now and december. one of these member states could enter into individual arrangements of the contractual

nature with the e.u. institutions on the reforms they commit to make in response to the country specific recommendations of the council to promote growth and jobs. another is the possibility of an appropriate fiscal capacity for the euro area. annuity requires further exploration and it was agreed that this is unrelated, i emphasize unrelated to the preparation of the next annual financial framework. it will be crucial for the new emu to be fully legitimate and accountable. as a general principle, we all agree the democratic control should occur at the level where the decisions are taken. it's also important to build the monetary union on the institution and michael frameworks and to make sure there's transparent member states outside the euro zone.

as in all of our regular european councils, i wanted to devote some time to strategic discussions on our external initiatives and now foreign policy. we focus on two main issues. first, relations with china. taken a step back and look at the long-term, i decreased the european council on the september summit in china, a very positive work. i see now, they are going and he went in and take a leadership change. with change used on how to engage constructively with the new leadership. we must pass on the same messages to be shooting, both easy and difficult funds and our contacts. china presented the package of proposals for future cooperation between the e.u. and china. we responded the same spirit of their own proposals.

we come back to this issue to prepare the next summit, which will take base in china 2013. second, we address errors in the world, syria, iran. this was indeed the first time that we had discussed about vince at the european council. the situation as a security coming humanitarian original in fact. it could also become a threat to our societies and securities. the union has contributed to the national efforts led by the united nations to stabilize the situation. we decided to accelerate our own planning for a possible european military crisis management operation and supports to the international military force in accordance with the recent u.n. security council resolution 2071. to conclude, this is a positive summit. it's good for europe but have a

single supervisory in the course of 2013. between now and december, we work on further progress to reinforce their economic and monetary. the biggest growth is restoring confidence in the euro zone. i thank you for your attention. [applause] [speaking in native tongue] >> translator: on behalf of the commission, mr. barroso. >> on oral numbers come the last week the european council was the first in three summit meetings this autumn. object does is to reach decisions which will have significant impact. though some short-term stability and longer-term objectives. on the compact for growth and jobs, the reality is to many of

our member states facing recession, unemployment remains behind with the potential to further undermine social division. i am painfully aware of the difficult situation in its many systems find themselves. implementing the contract, they are much more in a demonstration of our political will is the question of fairness and equity. in some of our member states, citizens make major sacrifices because of the situation resulting from excessive debts and a public-sector and the responsible behavior in the private sector. this is why we need to provide citizens with hope, with religious prospects for growth and jobs will return and the most vulnerable in society will not suffer. the commission has delivered a great number of proposals to

underpin the growth compact. however, the reality this gross compact comes including an important package worth 120 billion euros has not yet been fully implemented. some progress has been made, but frankly not enough. i present a third report describing what's on the table and what the next steps are. it is high time the proposals on the negotiation tables becomes a reality. let me give some examples. agreement is reached in the next two months on the proposals of venture capital catching a dispute resolution. the work needs to be explored on several proposals that are crucial for growth and fairness in the market. tax on savings, including the mandate for agreements with certain countries, professional politicization, he signatures. we need to get a new political

push in all these areas. i use government to do their utmost to bring the contract on growth to life, like why i can't find the possibilities you please finalize in legislation on elements. let us demonstrate to our citizens to europe carries a message for growth and jobs. when talking about growth, it is clear the financial side you're makes a contribution to the secretary. the recent progress on the financial protection tax following the requests we've now received from 10 member states, this geriatric and the commission will make a proposal for a council decision and enhanced cooperation. this would be the first step in the process. we also present an action plan on tax fraud and tax evasion, including before the end of the

year. i also want to concern to follow the adoption of the employment package, the commission before the end of the year has a guaranteed game. it will aim to ensure that young people with an aura months of being unemployed or the than formal education are presented with either the offer of a job, continuous education, apprenticeships. this'll be the support of the european social fund. we also introduce a framework to help young people and transitions for employment to work. we are taking these measures to prevent the lost generation in europe. honorable members, it is not just some jobs where we have to turn to reality. it is essential that by the end of this year, the agreement on the single supervisory for banks, but also a precondition for banks in the european stability mechanism. by reaching agreement on this,

the european union has an opportunity to restore confidence in demonstrate capacity to take difficult decisions in times of crisis and to send a message of stability. it does not seize this moment and let it also be cleared reaching agreement on these issues is a fundamental precondition if you want to be credible in economic and monetary union. regarding the single supervisory mechanism for banks, without the ongoing process, the european council confirmed many of the key principles on the commission proposals were grounded. that includes being as open as the truly possible to all member states who want to participate. as we've stated time and time again, we don't need the numbers. secondly, proper accountability at the rich decision, which were the commission clearly means to

this parliament and maintaining the level playing field and integrity of the single market. it also includes the passing of the ecb with wrist ability for potential supervision and the power to intervene if needed with any bank in the euro area and the separation of the supervisory function and monetary policy. and all these matters, we continue to work closely. an important element is the commitment that the agreement should be reached by the end of this year. i hope the government will not respect the commitments they've taken at the highest level. because let's not forget why we are here. we are advancing in a response to the crisis. we need to break the negative link between bank debts and sovereign debts and this is urgent. it is that the commission but the proposal on the table in the european council.

the single supervisory mechanism will give a seal to citizens, but also international partners and investors in general. the european council also spells out the need for the adoption of the provisions relating to the urbanization of national resolution and the product guaranteed forever based on the commission proposals on bank recovery and resolution and a national deposit guarantee schemes. it's also called for the rapid conclusion of the single rulebook, including agreement on the proposals unbend capital requirement. on all these matters, the commission were close to two in the coming weeks to move ahead quickly. honorable members, before we look at other longer-term elements, let me start by underlining are crucial legislation known as the tupac. the prior coordination of national budget is one important

pillar of our crisis and it is in the interest of the european parliament, i would assume, that we incorporate as many elements as legally possible into the community masses. and this is what we are doing. now that the european union institutions and member states have embarked on reflection, which will cover all aspects of a deeper emu, including issues of solidarity, i'm hopeful we can agree to that the other issues covered by the 15th -- [inaudible] as far as these aspects are concerned, the summit was an occasion to look in more depth on the issues of interim report prepared by this european council, myself and the presence of the european central bank in your group. i also underlying the

contribution made to this report. coming to the next steps, arriving from this house last month at the delivery blueprint before the december european council, the blueprints will set up building blocks of a deeper e.u. president honorable members, allow me a specific word about fiscal capacity of an economic and monetary union. as i said already in the address before this house, we need to develop a fully equipped economic government together with a genuine community fiscal capacity. this will complement efforts for stronger and more bonding framework for the implementation of key economic policies as one important means to prevent imbalance. while much has been done here

and the specific recommendations for further steps are crucial to combine specific recommendation the specific incentives and to make sustainable, when it's an idea is that the contractual arrangements before member states and the commission. such arrangements taken under the specific recommendations with specific support for their realization. we must however be clear that this has nothing to do with decisions on the next financial framework, which will hopefully be able to take in the coming weeks. present in honorable members, i went to think this house for the controversy on all these matters. it is very important at every stage of this process. we are designing new systems are the european level.

fixing the accountability where levels are taken will be the fundamental principles to guide on economic and monetary unit. at the same time, we need to make sure more democracy means more transparent the end not more complexity. with a complicated system of decision-making in europe, institutions and mechanisms and procedures are less readable from our citizens at the time when we need to draw together. there are also a few more key principles for the reforms. first we need to build the institutional michael framework on the treaties. on the community treaties we must have integration area as the basis for strength and our current era. we must ensure the existing and future members and they must respect the entirety of policies

connected at the level of the current very same 20 member states of the european union, particularly integrity of the single market. president, honorable members, let us not forget that beyond the banking supervision of responsibilities, were speaking particular about msf. not expect those governments are we thinking about the need for investments to promote growth and jobs. to contribute to support for the instrument for the level. once again, the soviet critical test to this policy. due to the summit, they were very important message regarding greece at the level government. in fact, the conclusion when we share that we expect rates to

continue policy reforms and encourage efforts to ensure implementation of the program. if it's necessary to bring about a more compelled by the sector, private investment and effective public sector, these conditions below greece to achieve renewed growth and will ensure its future area. i think it's very important that the government has expressed willingness in the commitment and hope of keeping greece in the area. finally come the european council with mention of our actions at the focus on our strategic partners, including china and the need for proactive agenda for trade. it is of crucial importance to europe defends his interest in this globalized world, but it's a vital element for the challenges of growth on the opportunities for further trade liberalization. present in honorable members, at

a time when many citizens have the capacity of europe to meet the to judge the face of the national committee, should the noble peace prize for sending a clear message, the world needs a stronger european union. to have recognition for the integration of the continents, which is over six years brought so much, but it's also the responsibility and challenge for a two show the everyday mundane courage to do the right thing, to take the decisions we need to take. by advancing the deepening of the union, by progressing towards the political union, let us make sure together that the project 2012 will not be awarded to an idea to pass, but to a project of the future. i thank you for your attention. [applause]

>> translator: at thank you, mr. barroso. i'd now like to debate first of all on the up the european people's party, mr. dole. >> mr. president of the parliament, mr. president of the commission, colleagues, by nature tend to be an optimist, but optimism is a real realism always be some action by achievement and on the basis of what we achieved in the last 60 years, which is just the beginning. so the nobel peace prize given to european union is the acknowledgment of a prebuilt together over 60 years. i think it's also an incentive to go further. i've lived in europe and in the community method. i believe in the added value of the european union, which is achieved through its common share policies. i also believe in european investment to the e.u. budget

every year injects hundreds of billions into economies and that's far too little. europe needs ambitious policies. europe is policies that will help us to recover growth and to implement these policies, and think the debate is clearly illustrated that that is wide but appeal to everybody to show responsibility, we need a financial framework in line with our ambitions and above all we need agreement by the end of the year to be credible to the outside world, mr. president council. last week the european council was a new step towards achieving our economic union. our crisis is an economic crisis, but our mistake was not to deliver commitments and abide by the rules we set ourselves. in recent months, we've shown that our responsibilities here in this house have created the necessary instrument that the

economic governance package, for instance, if the law now. it's got to be implemented in likewise we can say the same as the two, which will be discussed later today. i think we will achieve this in short order. my dear colleagues, one of the lessons of the crisis is we cannot exclude certain sectors from our shared legislation. for instance, the banking sector. the group is extremely attentive on this point. that's why we support pro-souls to create the european banking supervisor. any failure on this front and the failure of a single bank can have an impact on the system as a whole. if banks feel they're too big to fail, then no bank is too small to be supervisor would argue. we are convinced of this. citizens, companies and banks themselves need to have trust in our financial system.

in the epp, we are committed to doing everything possible to get europe out of this crisis. we want to strengthen the european union because we believe europe is a solution for 20 odd years now, the european single market has been a sign of success, the first of success is to be disdainful, we have to force heads of state and government to fill in the gaps in the single market, particularly thinking of the creation of the digital single market. not doing this means a loss of a billion euros turnover every year. europe is at a crossroads. some apply to recover powers for the european union and reduce your true free trade area, that europe is far more than that. since the signature of the treaty, the european project is a synonym for peace and prosperity. he was awarded the nobel peace prize in europe has been a

shining light over the 60 years. but what we need to do for the future is strengthen the social market economy and also continue defending human rights and should be standard errors of our values. we need to go beyond that. mr. president of the council, this is something i have reiterated in this house. in times of crisis, we need decisions when decisions are taken, mistakes can be made. the worst possible thing you can do intensive crisis is waiting means many millions of burden on our citizen appeals to you. please draw a really good european budget before the year is out. that's where we can show our will to the market. good luck on this. and i wish you every success. i wish you a come back to us with a christmas present for the december session. thank you very much. [applause]

>> nlb half of the democrats, [speaking in native tongue] >> translator: thank you. can i begin where you began, with the question of the ecb and the quality? first of all, our position on the argument with mr. nash i am disappointed, but i like to focus on what she said today because that is not enough. that is not enough for us in this house. we are not prepared to accept any cohesiveness or excuses. we want to get forward. we want to build bridges. the department has built bridges and when we talk about gender equality come it's not sufficient to say we don't have enough. we don't want a description of the situation we want to see how we can move forward and improve the track record.

now moving on to the council. now, i'm not going to say that this is indicative result, but with a positive thing? the 27 and 28. to reactivate all this time to see that it's not working? member states have got to do their bit to report it to work. the problem is just that the growth pac. it said today would not have been a more in depth discussion come a more intense debate about the commission that is not yet accepted with the world bank told us. where we cannot accept the hypotheses leading to the recession and there's others in this house preventing us having that debate. it's on the growth pac. it's a growth policy. it leads straight into recession, one which leads to growth in jobs. that's what we are to hear.

do you not realize that growing unemployment goes hand-in-hand with growing euro skepticism. that's a problem we have in theirs many sideshows and distractions talking about the budget and the super commissioner to address the problem are now facing. a banking union has been necessary for a long time and sooner. it's not a german thing. it's two different rationales, two different schools of thought. the institutional issues are important. this can be in the convention. we can discuss and debate the super commissioner not about the social problems, which are currently so pressing. in spain, in an island with

recapitalization, all i can say this week as the absentee group to want to leave spain or greece to its own devices. we went to see a banking union have been ahead quickly sensible rules, capable of for engaging in recapitalization. that's what we want. they still it's your policy, this delay is not what we want. we have to take care, taken up time. but don't let the crisis become exacerbated in spain and greece. that cannot be objective. that's quite unacceptable. now on the question of the social dimension. relieved of his sector, the fifth column, the fifth pillar for social policy, that is urgently needed. we cannot outline social things to be done when the press conference said we can see the social hardship, but it's not against sufficient to say what

is. we've got to do is say what can be changed. that is what were looking for. now we are very proud of the price and people are handing out the group is proud. but we've got to -- there's more that we've got to cover other bases, including the social one. i don't think we're there yet. and sometimes they think we're putting on that. let's be clear about one thing for those who want to get a veto over the budget. but can i say to you, mr. cameron, that we have god -- there would be a solution going to 2013 on the basis of 2012. going to 2013 on the basis of

2012. -- everyone has got to be basis of 2012. -- everyone has got to be on site. otherwise you're going to end up with 2012 as the basis for the campaign and the future budget. and just one final point, it's not sufficient for mr. cameron to move further and further away from europe and to speak about it with the public. if you don't want to be with us, then go your own way, but don't try to haggle and make these comments from far away. i believe you've got to be on board and play the game come and be part of the team if you want to be in europe. thank you very much. >> thank you very much. on behalf of liberals and democrats. >> mr. president, let me first welcomed the decision on the banking union and the european council. i have to tell you it was

already decided in june. the better the european council that decides twice the same thing. i think they're nothing at all. so i'm in any way not to see that the council also, mr. president, finally agreed with the position of the european parliament and commission. we said from the beginning that this system has to be applicable to other banks and it was indeed an absurd idea to supervise only some banks. and the second remark is also what our colleague said for the bank table, but i have to tell you it's less positive because the timetable they agree is certainly linked to the electoral alexander of germany. i find it irresponsible that we have to wait first of all nine

months before we can start to implement something that we shall approve the legislation by the end of the year. .. we want the government policies and binding legislation. and may i ask about also --

every month i come back to you and i ask you, where is your proposal on the redemption fund, and on the start of a europe-backed market. you know it's the only way that interest rates can go down. vrovania have a fiscal deficit less than 3%. it's a small market and nobody is interested today. the european market is the only way to solve this. the parliament's position is clear. if there is no proposal on the table we shall not approve it. mr. sharp can say i was a

supercommissioner for economic and military affairs. he shall not go in that direction. when i am in favor of that proposal if there is no proposal about the debt or first step on the europe-backed market. we are firm on this because we know it is the only solution to answer this crisis besides all the other measures to date. and then finally, something completely different, mr. president. serious. i think it's time that european council is doing something. the nobel prize winner of peace does something. we all know what it needed in syria. we need a fast as possible a no-fly zone so that assad cannot no longer do what he is doing now, using his air force to massacre his people.

is becoming more and more -- daily bombardment by the syrian air force and a whole city in ruins, and i find it's a scandal that neither the european council or other european institutions are taking their responsibility together with the international community on that scandal. >> thank you very much. i look forward -- now the green group. mr. president, mrs. president, colleagues. first of all on women's issues in european union, i have to say i wish all the very best to mr. rearing. i would urge all female commissioners in the european commission to move this forward. every woman in the european

union who is called to exercise influence in the european union or throughout the european union should know basically it should be about ability. other women should know are willing to push through measures such as quotas, and this awareness, this idea that should encourage all to back mrs. reading in the european commission, and mr. boroso. so, expect you to take a positive initiative, which can make the european union shine. but you really support mrs. reading on this now. now, it's a real pity that mr. marsch should be involved in this.

we in the green group can't accept this at all. maybe that's good enough for you, maybe it's good enough for you for women to stop being represented in the european central later on, as of 2008. we don't want this, mr. president. we want a woman in the european central bank at the heart of power. we won't be fobbed off on this. >> ladies and gentlemen, the nobel peace prize has cropped up in the debate. i was wondering if i wasn't mistaken about all of this. when i heard about the decision by the nobel committee, i was deeply moved. almost at a a personal award because i think it was an

acknowledgment, a love letter, if you will, the european project, and this meant i look to the summit with rather different expectations now. one can expect a bit of teflon coating to happen. i think this is a crucial moment because this appeal to think bigger, to be more ambitious in the european union, that was the meaning of this. this is the core of being awarded this. it's a question of thinking through. what we have managed to achieve together and what we can achieve further. now, fair enough. more time has been taken on the banking union. it would seem we can afford that. as happened on the -- has managed to buy some time.

now the crisis is not quite as cute. it's moved on to chronic phase, if you like, but please, don't take too much time, and please don't make declarations such as you made in your speech today. i think the end of december shouldn't be the beginning of a clear supervision of banks. i think we need the other two pillars as well, which have hardly been mentioned at all. these also need to be operative, investment insurance and the possibility for winding down banks within the european union. we need to make this subject through proper democratic accountability which will generate more trust. so you have a lot in december. now i want to say something mr. van roper said. everything is going to be better. now, maybe you're reading

different statistics from those i read. maybe we could swap statistics. but i have figures from the international monetary fund and the world bank that show that only aggressive austerity policies will not even improve state budgets. we have higher deficit inside countries in crisis, and we have a declining economy in the european. suffering from high unemployment, across the board in the european union, particularly youth unemployment. so in light of this, i think what the international monetary fund and the world bank is saying is important. if we want real economic recovery, have to take this. we need to go beyond mere austerity and deficit policies.

economic recovery can only take place through growth policies. now, i'm looking forward to seeing what you propose. it would become a dead letter. the current approach, completely unimaginable. to conclude, ladies and gentlemen, president and chancellor merckle were asked, if you want proof that the nobel peace prize wasn't deserved, then that kind of question has to be political union, a deepened european union. has to be taken away from these two individuals.

mrs. merckle needs to turn to germany and say, why just sticking to your guns is actually making the situation worse and also, mr. lawrence has explained to people why france has to transfer to brussels. thank you for your attention. [applause] >> mr. sinclair, please. >> thank you, mr. president. as a point of order, i'm just wondering, are we all allowed to run two minutes over in the interest of fairness? >> mr. kellen, on behalf of the ecr. >> thank you, mr. president. there were some good things to come out of last week's council. for instance, the support of the market of 27 member states, developing more open trade, the cutting of some red tape, and

the withdrawal of some pending commission proposals were all good things. need to see more action on all of this initiatives initiativesd certainly my group will support you in taking these initiatives forward. when it comes to the main topic of debate, the euro crisis, we can see the summit manifestly failed to deliver. mr. van and you and mr. boroso spoke in june, and you spoke about balancing solidarity with responsibility. you described the results back then as significant. you said it took europe a few more steps down the road to recovery. well, of course, over the summer it became clear that some key member states had second thoughts about what they agreed then, and a few small steps forward were overwhelmed by some pretty giant leaps backwards. the only significance of that summit was that it represented yet another missed opportunity.

the window created by the actions of the ecb to enable political leaders to get ahead of the curve and reassuring the market was lost then and is lost now. no amount of fudging about the timetable to the supervisory mechanism. the carefully chosen words about support, this summit simply backtracks on what was agreed to then. i have simplety for mediterranean europe and northern europe. we can't continue this stalemate with sides unwilling to hand things over. it seems to me, we now have no chance of making any headway towards a solution to the crisis before the german elections. and the problems we face is quite simply one of leadership. now, to take a topical example. it's been mentioned in this debate. when the e.u. was awarded, there

was bickering immediately about who was going to accept the prize and who what going to make the speech and i started thinking about the political leaders and organizations who actually really deserve to collect that prize for delivering peace in europe, for holding firm during the cold war and challenging the might of the soviet union. i thought of president degaulle and president reagan, and other figures. that seems to me they had one thing in common. they had political courage. the courage to stand firm to take political risks and make sacrifices for what they believed in. and what a sad contrast to modern day europe we find today where difficult decisions are delayed. the timetable slips. the political realities are ignored. and it was sobering to note that the nobel prize was awarded to the eu not because we are

dealing effectively with the current crisis but because we are failing to do so. it's not a message of congratulations to europe's leaders. it is an act of charity. the prize has not been given to the e.u. because it is strong and doing well. it's being given because the e.u. is weak and doing badly, and that was made clear in the citation in the announcement. so let's put aside the self-congratulations and forget the mutual back-slapping. let's got o. instead of making the urgent decisions that are required to make the european economy competitive and to launch the project again. thank you. >> now on the european, mrs. timer. >> gentlemen, first of all, can i thank the committee because yesterday, for example, they took a decision that they would

send on the recommendations this week. that mr. mersch choo not be in office and i hope this sends out a signal of the support of the european parliament behind it. because sends completely the wrong signal for us to say that europe can continue to be a monopoly of men. and because this really means it's a signal that -- it comes up across the board, the need for social, regional cohesion, and then it's always a man's voice, and i think that is sometimes rather than represented, misrepresented. at the last summit's conclusion, the results, said that there are two victories with regard to the microphone, and we then had the

repetitions. i think that people maybe -- everyone else lost because they're simply playing for time. what we need is thought going to the idea we need the connection in the e.u.'s policies and the policy -- for example, the employment packet. are we serious in sending out recommendation getting from the council when it says that what's important is the structural adjustment programs of member states and raising questions about regional spending when it comes to jobs. 25% for the ess. is that going to be forfeited, going to be lost? the platform for combating exclusion, that's a battle we have to keep up. overcoming the effect of millions of the people across

the-under european union, and you look at the conclusions and look at the nobel prize thing, that this is well deserved. well, not, if you look at the track record. what should have been sent out by signal? it should be telling us that austerity does not mean increased growth, and the things of the imf, this is a policy which has meant that hundreds of thousands of people extra have been ending up in hardship and social exclusion. forced to the margins. we don't want an undemocratic fiscal setting. we need a solidarity part. and not predicated on the 1%. what we want is a fair distribution, a fair shake, and we've got to look at who are the

culprits for the crisis. now, greece, the last installment, the next installment. this is simply for servicing the debt on the budget. the billion is for the banks, and similar with portugal. 78 billion, but how much of that goes into the national budget? much less, and this is not balance. this is not striking a balance, and we have to get the balance right. we have to restore the balance. therefore, the timetable for banking union, let's at least take the time to make sure that we're talking about recappallizing national banks is not marching ordered for the ecb to be a lender of last resort for the countries, and a complimentary role which is needed with the european

investment bank. we have to have a course correction. we have to turn the tide and then talk about prices. thank you. >> well, when you first appeared here, in what proved to be a rather expensive speech, i said you'd be the quiet assassin of nation state democracy, and you have gone about your course, but i have to say you're even worse. i thought it was just going to be a federal europe. a federal union, but actually it appears with every statement you make what you now wantes the total subjugation of the states to completely undemocratic base in brussels. i misread the bailout. i thought when it happened, i saw the panic in this channelber, people fearing economic breakdown. but you were calm because you the saw the bailout as your opportunity to take control.

think our highland is managed. greece. the sinister sounding trocca come in, 50 officials investigate the situation, and then tell puppet prime ministers what they may or may not do. i note great thump in this chamber for spain to have a bailout. lots of members here want spain to accept the bailout so they're subjugated to the new order, and in italy, the appointey -- appointee there is keen to have this country bailed out because he fears the parliamentary democracy could bring down the european union. so it's clear that your next phase is for those that haven't been bailed out and may not need to be bailed out, you now want them to sign guarantees, budget guarantees, and to have the power to strike down national budgets after they have been through parliaments. i have to say, i feel that the

eurozone is now in a investigate dark place, economically, socially, politically, and i fear for the countries trapped inside it will be there for many years to come so it's against this backdrop that the nobel peace prize has been awarded to the european union. it's true germany has not invaded france since 1945, but i don't think there's any prospect of that happening unless you're saying the germans are inherently bad people. the threat actually came from russia see. be thanking nato and millions of american soldiers who served on european soil to maintain peace, yet i don't hear a word of that because we loathe america and everything it stands for. this is now a divided split europe. with neonazi politics on the right, violent demonstrations in the streets and i think the award of that nobel prize devalues the whole organization. what is not all bad news because

in britain, the opinion polls are clear, that a clear majority of brits now want to leave the union. leaving david cameron as piggy in the middle. trying to pretend to be a euro skeptic when he comes over here, going back home and claiming victory. but he is stuck, and i predict one thing, big political change is coming in britain because he is losing the support of millions of his own voters. thank you. [applause] >> and now on behalf of the -- sinclair. >> thank you, mr. president. once again we have a summit that promises a solution but in the fullness of time delivers little bit further e u -- for the unelected bureaucrat in blinded state leaders the financial crisis has been used as a tool for further -- we paying for the

u.s.' fantasy of the europe. have you learned nothing from your folly? the president care little for the ordinary person. this latest round is done on the beaks of the greece collapse and the 43% increase in the suicide rate there. my favorite is the uk who, despite being out of the eurozone, is speak seemingly unaffected. david cameron has given the green lights to the banking union and gotten nothing in return. why? was not the opportunity to renegotiate some of the powers back from the european union which cameron promises. shows his words to be empty and that once again we have conservative party who talks tough on europe, but cameron says nothing more than the german chancellor's poodle.

three out of four conservative voters want a referendum. leadership continues to sleep walk the uk into a federal europe. so i call on supporters to stand up to david cameron for the future of your party and for our country. send him a loud message. we demand a referendum. >> now watch our coverage for the presidential candidates, tonight a look at how the dodd-frank financial regulation is being implemented. first, a security and exchange commission chairman, mary shapiro. then an analysis whether regulations can protect the u.s. from another financial crisis. and a discussion on when and what could cause the next financial crisis.

securities and exchange commission chairman mary schapiro expressed the importance the financial res laying act known as dodd-frank. chairman schapiro said it would make markets more transparent, stable, and efficient. from the george washington university law school, this is 45 minutes. >> good morning. i'm the debris of the law school, as art said, and i want to welcome you to this conference, and obviously

welcome mary schapiro, the chairman of the u.s. securities and exchange commission. so, one of the things i think makes this law school, the george washington university law school, distinctive, and different from other top law schools is the degree to which we are integrated into the real world of law and policy practice in this country. and so one of the things we are always striving to do is not be an ivory tower academic institution solely but also one that is always trying to engage the practicing bar, people from corporations, people who are not lawyers, in the educational enterprise and also in public policy discussions, and obviously we have a great advantage in being in washington, dc and having so much access to the world of

policy. but in addition it's not just the location. it has to be your orientation as a law school, and so it's something that i've emphasized sense i arrived but it long predates me that this school wants to always be the place to convene public policy discussions, to create a forum for actionable information, to create an opportunity for nonpartisan and bipartisan discussion, as i like to say, in d.c. but outside the glare of d.c., not on a congressional hearing room floor, not in a formal interagency process, but in an academic institution where important policy discussions can be had and maybe we can move the bull forward. -- move the ball forward on important issues of leadership. in that regard, we are thrilled to be able to host this

conference, and this is part of a series of conferences we have held over the last few years on the important regulatory reforms of dodd-frank, and to welcome back to the law school, mary schapiro. mary is not only a graduate of the law school but has been a great friend of the law school for many years. she has spoken here on numerous occasions, and we are always thrilled to have the opportunity to welcome her, and i'm really grateful she has figured out a way to fit this into her unbelievably busy schedule so she can be here to speak and give us her views up to the minute views from the sec. so, please join me in welcomeing mary schapiro. [applause]

>> good morning everyone. thank you for very much for that kind introduction, and in fact for your wonderful stewardship and leadership of my alma mater, and it's always wonderful to be back at gw. i also want to thank the university for hosting the financial regulatory reform symposium. i think it's an important opportunity to contribute to the debate and discussion around financial regulatory reform. four years ago this month, this nation was suffering from a near collapse of our financial system. while there are differences of opinion as to what was the most significant trigger, a bipartisan senate committee report known as the levin coburn record, asserted the crisis was the result of, quote, high-risk complex financial products, undisclosed conflicts of interest and the fail or of

regulators, the credit rating agencies and the market itself to reign in the excesses of wall street. while the period of our history will be written and rewritten over and over again, congress and the administration knew that the status quo was unacceptable. so, together they passed landmark legislation to address many of the issues that were highlighted during that tumultuous period. the dodd-frank wall street reform and consumer protection act is a vital and comprehensive response to the financial crisis, and an event that devastated the american economy, cost the american people trillioned of dollars and millions of jobs, and undermined the confidence that our financial system requires if it is to thrive and support a growing economy. the sweeping scope of this financial reform legislation sometimes obscures the fact that despite its breadth, it is rooted in a handful of sound principles that should have been

more firmly in place before the crisis, and whose embrace serves to make markets more stable and efficient. simple principles, like markets should be transparent. regulations should be consistent, without gaps that can be exploited by those who wish to indulge in risky, destabilizing or even illegal behavior. market participantses, not taxpayers, should bear the risks of their market activities. and regulators should have the willingness and the tools they need to apply these prims to the day-to-day workings of the financial markets. the dodd-frank act translated these principles into a law that is the foundation for effective regulation. interestingly the title of this historic legislation may seem to suggest that there are two parts to the bill. wall street reform, and consumer protection. insure yet a closer examination of the law reveals that both portions are rooted in those same personality fundamentals.

that is because opassty, flaws, and regulatory gaps make the system less able to perform it's vital capital allocation function, more likely to collapse, and more likely to subject investors to unnecessary harm. when i was invited to join you today, the dean offered me a broad opportunity to speak on a wide variety of topics. and not entirely focused on the dodd-frank act. but as someone who has lived and breathed dodd-frank since well before its passage in 2010. i'm sure i could speak for heroes on even the most arcane aspect of that legs but i promise you i want. when i arrived as second -- sec chairman in january of 2009. there will some calling for the agency to be divided or split up and divided among other entities so is when the financial reform legislation was being drafted, i a advocated the importance of

the sec's mission, a mission to protect investors and ensure the efficient operation of our markets and formation of capital, and i impressed upon policymakers that the sec could and would step up and fulfill its mission. in the process, i worked with those on the hill and in the administration to ensure the sec would have its authority bolstered, not weakened. and i'm pleased that's occurred. it was a sign that congress appreciated the need for a strong sec. at the same time, i'm also proud that congress gave us tools in dodd-frank that i sought, to create a new whistle blower program that is resulting in high-quality tips from insiders at financial firms. to require hedge fund adviseyears for the first time to register and be subject to our rules. to proceed with additional clarity and establishing a uniform stanford government conduct and to deal a

comprehensive regulatory regime for over the counter derivatives, among other things. today i'd like to focus on a few specific provisions of the act, tying them back to the fundamentals i mentioned in hopes that should the students who are with us today, ever put your impressive educations to use as public servants, you will look at potential regulation in just this light. so let me start with title 7 of dodd-frank, the part of the act that for the first time creates a comprehensive regulatory regime for over over the counter derivatives market. it addresses the derivatives market with a global value of some $650 trillion. derivatives are financial products derive their value from some underlying thing, and one common type of derivative is a swap, which is a financial contract in which two

counter-parties agree to swap payments with each other as a result of such things as a change in stock price, interest rate or moment price. back in the early 90s when i served as a commissioner of the sec, and later as chairman of the sftc, it was difficult to imagine the sheer size or potential impact of this then-emerging market. at that time the value of the derivatives market was around 10 trillion and much of that was comprised by hedging by end users against the risk of currency or commodity price fluctuations, that is, companies were essentially using these transactions as insurance against an adverse event. well, there were some regulators who appreciatedded the need to get a better handle on what was going on behind the curtain, industry strenuously objected to any regulation, and with the commodity futures modernization act of 2000, congress created a huge gap in the regulatory structure by specifically

excluding most otc derivatives from any regulatory oversight. the result was a vast market operating behind an opaque curtain whose transactions were not visible. the gap in regulation allowed a fundamental tenant of driving marks, mainly transparency. not only to be ignored but actively reject. unfortunately we found that firms entered into otc derivative transactions so reduce their market risk had simply swapped one risk for another. market risk for counter-party risk. opacity made it difficult to make sure -- in fact as more and more otc derivatives were transacted across the system, an elaborate network of risk built up. firms were not only stodge the risks that their own

counter-parties could not make good on a transaction but their cars party's counter-aparts might nail to live up to the terms, and thereby transplating it back to the original firm. this type of cross-firm connectivity has the ability to greatly michigan any identify the systemic shock of a default of any single firm. during the crisis there was a real possibility that the default of a single large counter-party could set off a train reaction that would spread to many interconnected institutions. traders, in the commission's word, rushed for the exits. asset values fell, risk manage independent the absence of liquid derivative markets, became vastly more complicated and credit dried up. title 7 addresses challengeness the otc derivatives market by closing the gaps created by the

commodity future modernization act and bringing the derifetives market into the daylight, and working with the commodity futures trading commission, we have been writing rules that fill out an entirely new regulatory regime, one that strengthens the stability of our financial system. these rules do this by improving transparency and facilitating the centralized clearing of security based swaps, helping to reduce the counter-party risk, enhaasing investor protection with disclosure and mitigating conflicts of interest of dealers and other major participants. by promoting transparency, efficiency and stability, this framework is intended to foster a more him inle and competitive market, and enhance oversight and monitoring by facilitating access to information.

a report last year underscores the benefit of bringing the financial fundamentals into the market. it predicts the market for interest rate and credit default swap will grow by more than 10% by 2013. quote, notional values and derivatives are expected to rise due to increased transparency and counter-party risk mitigation. instead of transacting business behind closed doors, this new system will require certain transactions to be conducted on a public trading platform. once the transaction has occurred, the rules will require information about the trade to be reported to a data repository, and in turn that information will be shared with the public. and many of the trades will be handled bay clearing house, essentially a middle many that steps in the place of the original counter-parties and effectively assumes the risk should there be a default. despite being handed the lion's share of the rulemaking under

dodd-frank i'm pleased the sec has now proposed substantially all the rules that create this new regulatory regime for derivatives within our jurisdiction and in some cases has accommodated the final rules. this spring and summer jointly with the sftc, the sec accommodated key definitional rules and interpretations on which this entire new regime will be built. we also recently adopted rules regarding our clearing infrastructure, that group of middlemen critical to achieving the goals of title 7 in june of this year we adopted rules specifying how clearing agencies for submit information to the sec, so we can decide which types of security-based swaps must be cleared, and just this week we deposit rules outlining standards for the risk management and operation of clearing agencies. even without the regulatory regime fully in place, more and more swaps are already being cleared. a trend that reduces recollection and should

accelerate as the rules come online. to help ensure the system comes online in an orderly fashion, we have drawn a road map setting for the anticipated sequencing of compliance dates when rules take effect. our goal is to avoid the cost and disruption that could result if compliance with all the rules were required simultaneously or hap hazardly. market par tis paints have provided comments, and we along forward to completing the adoption of rules. building a comprehensive regulatory regime from the ground up in close coordination with the cftc and consultation with numerous other domestic and overseas regulators is an immention -- immense action, hundreds of meeting and thousands of comment letters from stakeholders. but we will not lose sight of the big picture. if the new marketplace is truly

transparent it will work better and more efficiently for all parties. if we close the gaps the markets will be safer for investors and economies around the world. the market par tis paints focused on in title 7 generally speaking are large players. airlines that want to hedge the price of a year's worth of jet fuel. hedge funds that want to take a bet of a billion dollars on the direction of the euro. but the provisions of title 9, unlike title 7, are much more likely to directly touch the lives of you and me, designated the consumer protection section, it is in fact also full of systemic safeguards. designed to limit practices which at first seem only to affect individual investors or specific kinds of participants in the financial system. but these practices cumulatively shook the financial system to its foundation and despite the difference in the size and the nature of the players engaged by title 9, the need to have the

playing field defined by the same sort of fundamentals remains. let's take home mortgages. persuading potential home buyers to assume a mortgage they have no ability to repay sounds like a classic consumer protection problem. but when millions of bad mortgages are written, bundled, the financial system as a howl shedderred. it's impossible to pinpoint the exact moment the financial crisis began. but clear lay major turning point is when bear stearns collapsed in march of 2008, dragged down by billions of dollars in toxic mortgage backed facilities its hedge funds acquired. but the problems with the mortgages underlying the securities began long before they found their way into the portfolios of the high grade structured credit fund, and the high grade structured credit enhanced leveraged fund.

a critical financial regulation was being circumvented. institutions which profited from the origination and bundling of subprime mortgages found a way to do so with little or no risk to themselves. during the housing bubble, companies found they could write mortgages mortgages and then sell them off, pocketing the origination fee and passing the risk down to securitization chain. some originators bore no risk. since originators bore no risk they had every incentive to let underwright standards slide in the era of interest only, wire loans, mortgage originators pushed loans out the door with little or no consideration of whether mortgageees would be able to pay. even before the dodd-frank act passed, the sec had proposed regulations to bring reform to this market by requiring that sure tiesers provide investors with the data and time to

investigate the soundness of the risk, the soundness of the investment or the risk offered by the assets, bringing greater transparency to an important financial product. this sort of regulation would have given investors insight into the quality of the subprime loans underlying the securities they purchased. giving them the opportunity to discover just how much risk they were assuming, and it would have required some risk retention as well. title 9 attacks the problem even more broadly. this provision attempts to incentivize high quality origination by requiring that secure tiesers retain at least 5% of the credit risk of any asset it sells. it also prohibits a securizer from directly or indirectly hedge organize otherwise transferring away the credit risk. using risk retention allow the interests of originators and

secure tieser with investors minimizes the moral has that committed to the crisis. the commission proposed rules to improve the quality of underwriting and research by originators and securizers and does such as much by ensuring market forces are in place as it does through regulatory prescription. it protects investors and the financial system as a whole. the commission is also adapted further rules for asset-backed securities pursuant to title 9 in january 2011 we doesn'ts rules that requires securitizers and requires them to disclose asset representation demand, repurchase, and replacement history. and again, this will help to protect investors and the financial system as a whole. but that's really just the start. the negligence and sometimes outright fraud that too often

marked bubble era mortgage underwriting was compounded by excessive investor reliance on fatally flawed ratings of securities built on top of these loans. as late ace -- as january 2008, 64,000 as set backed securities were rated aaa. unfortunately as the senate investigation subcommittee stated, analysts found that over 90% of the triple-a ratings given to subprime originated in 2000 and -- 2006 and 2007, were later downgraded by the credit rating agencies to junk status. now, as i mentioned a moment ago the sec had begun rulemaking designed to lessen investors depend on rating agencies by dramatically increasing visibility into the underlying assets. the dodd-frank furthered that effort. for instance in january 2011, the commission adopted the first of approximately a dozen

required rulemakingses related to nationally recognized statistical rating organizations, or nrsros or credit rating agencies. and in may 2011, the commission published for public comment a series of proposed rules that would further strengthen the intig grit of credit ratings, including by including transparency. additionally the sec has acted to end regulator reliance and reduce investor reliance and credit ratings, and to ensure that ratings are reduced independently of client innuisance, using more accurate data for investors to analyze. we removed credit ratings in 18 of our rules and half of those were row moved before dodd-frank was even passed. earlier this year as required by the act we established the office of credit rattings within the sec, which will play a key role as we move to finalize rules, including, among other things, proposals to designed to

prevent sales and marketing activities from influssing the production of ratings, proposals to make the actual performance of ratings visible to investor, and due dual generals, proposals that would establish standard for rating analyst training, experience and come tense and putting in place a testing program and proposals to require nrsos to report on their internal controls in addition, we're also considering proposing regulations that would require rating agencies to, among other things, be required to protect against any conflicts of interest, even more effectively. provide along with the publication of any credit rating, enhanced disclosure about the methodology used to determine that rating, and remove yet further references ro credit ratings from our rules. the commitment to fundamentals

as a basis of reform carries into areas where the connection may seem somewhat less obvious. so-called stay on pay regulations which gave shareholders regular, nonbinding up or down votes on executive compensation packages and golden parachutes is one such case. the sec, of course, expressed no opinion regarding the level of executive compensation at a particular company. rather, our interest is in ensuring that in this matter, as in other areas of corporate governance, the shareholders who open a company receive the information they need to make an informed judgment and that they have a vehicle through which they can express that judgment to the board. today it appears that the say on pay regulation effected through sec rules under dodd-frank is leading to improvements in communications in both directions. it is given shareholders a clear channel to communicate to their boards satisfaction or a lack of

satisfaction with executive compensation practices. and it's giving boards a powerful incentive to clarify disclosure to shareholders and to make a clear, coherent case for the compensation plans that the board has approved. the outcomes of these votes are not binding on the company under the law or on its board of directors and do not affect the validity of executive compensation arrangements. the advisory vote does, however, let boards know what shareholders think of compensation plans, and companies now have to disclose in their proxy statements in the year following the vote how they responded to the most recent say on pay vote. now, few compensation packages have actually been reject, but even in many cases where shareholders approved the board's compensation strategy, a significant percentage of shareholders have often voted no. it's our expectation that no votes are even a significant vote against a company's executive compensation

practices, will force boards to ask themselves some very tough questions about their compensation policies, and about whether they're communicating effectively with shareholders about the policies this: the regulation required companies to provide shareholded with of ain't ride have i rote on the say on pay votes at least opposite every six years. we understand that most companies consistent with the previous reps anniversary -- preferences of their shearholds are holding say on pay votes every year. this demonstrates shareholddedded want boards to focus on executive compensation and i'm hoping the votes will focus on the incentives they're crediting through the executive compensation policies. in this respect the regulations the sec adopted in 2009 that ask companies to detail the relationship between risk-taking and compensation, and to more fully discuss their approach to

managing risk in this regard. regulation that broadly facilitates board shareholder communications on the subject of risk management, whether through disclosure generally or say on pay deliberations. will result in greater board attention to risk-taking incentives and companies more resist extent to the kind of financial epidemic that spread so rapidly from firm to firm in 2007 and 2008. the financial world is full of zero-sum games. if one party to a currency swap wins the party loses. if you're short a stock your profit or loss is exactly the same as a loss or profit incurred by the entity that bought your shares. but financial reform really isn't like that. of course in individual cases investors and consumers of financial products may have different priorities than brokers and banks, but broadly speaking, good regulation, rooted in fundamentals that are frankly no secret, transparency,

risk management, fairness, broadly benefits all stakeholders. transparent markets more efficiently distribute capital. fair markets bring investors and their capital into the game. properly allocated and managed risk curbs irrational behavior that can have devastating consequences. it's not that hard to figure out. unfortunately there are powerful individuals and entities which profit at least in the short run from inefficiencies and opaity, taking irrational risks knowing that profits and compensation will accrue to them and losses are paid by consumers, shareholddedders, taxpayers and the economy at large, i think dodd-frank recognizes this and built a comprehensive structure on strong principles that protect investors ex-may wall street work better and work to the benefit of the financial

system broadly. thank you. [applause] >> children schapiro has kindly offered to page a few questions. so if you wish to ask a question, please raise your hand. one of our student volunteers will bring a handheld mic to you. >> i can't see anybody. so it's really bright up here. >> questions for chairman schapiro? >> yes. >> thank you for your opening remarks. i was wondering if the sec was willing to adopt financial stability board's kind of guidelines on executive compensation reform, which the europeans have adopted. i'm not sure whether the u.s. is moving in the same direction.

>> you know, it's an ongoing subject of conversation at the sec. i guess i have two responses. one is that we have jointly proposed as dodd-frank requires with the banking regulatory agencies, says executive compensation disclosure rules, including holdbacks and delayed payouts and so forth, and as you can imagine we have got an lot of comment, and those rules are not finalized. we're working with other regulators to do that. the second thing is the sec's approach in the era of compensation has been a disclosure based approach, and if you look at the history of rulemaking in this area, you can see ever greater requirements on public companies to disclose their compensation policies and practices, including, as i mentioned, rules we did shortly after i arrived that require compensation committees of boards to explain how their compensation practices may

incentivize risk taking and what the board is doing to manage that incentivizing of risk so the franchise and share holders' money is not unduly put at risk through the compensation practices. so, we have detailed compensation schedules that are contained in corporate filings. detailed disclosure about not just incentive bonuses but other components of compensation. but with the exception of the work we're doing under dodd-frank with the bank and regulators to take a more chris closure based approach. >> thank you very much. >> other questions? >> thank you. and again, thank you very much for your remarks. it's really an awesome task that the regulators have been put into, to develop this regulatory

framework for derivatives. we're not being linked from multilateral influence and it concerns me that the sec and even our banking regulators are worried about other multilateral issues that are kind of put on us by way of g-20, and u.s. compliance with g-20 isn't repealed. so one issue is where our regulatory framework -- especially for the banks and the big financial institutions, is influenced and you may not be able to speck to that, but the complications of what our big financial institutions under the power can get away with because they say that, well, we're in these other jurisdictions and it has some kind of a leverage in a way against the sec:...

>> where the velocity with

which money and transactions past is quite extraordinary. we cannot assume we could do only what we thain quirks in the u.s. market although clearly the u.s. markets are our main focus. starting with mormon there is broad agreement about what needs to be done with respect to the derivatives market. and has be reemphasized and recommitted over and over which is the value of transparency and trade reporting and collateralizing the positions and so forth. given the high level

agreement we were down there every country with regulatory regimes. one of the challenges is a mismatch of timing. dodd rank was passed maybe dead japanese was the closest and we set about to do as congress directed us to do. regulators are working together extremely well. it is a huge component to coordinate and collaborate to the greatest extent possible. but to give a specific example. the ftc and end i have detailed sessions with principal players around the world. the next session is an early november. we're trying to work out the

details of the regime in comparison to europe, asia, it's. our goal is to create as collaborative and regulatory regime negative we possibly can understanding it is not identical. the goal is not to have transactions go to the lowest and birds. multinationals have conflicting requirements with different jurisdictions so it becomes unbearably costly to do business. it is taking this long to get the derivatives regime in place because it takes a

lot of time. i continued to be optimistic. a reasonable framework to close the gaps in and not create opportunities for arbitrage. >> the sec announced a goal reliance on the large rating agencies. but you also raised the cost of regulation within the agency's with more disclosures. you describe greater transparency. how would new agencies shoulder those regulatory expenses and be able to compete with the big three?

>> a great question. and one of the goals is to try a to encourage more entrance into the space so we don't have three agencies in doing 90% of the work. they really need to reduce the reliance on ratings given that a busters add excessively relied on them without doing sufficient due diligence of their own to make sure they were not problematic. frankly the model the issuer pays model where i have you give me a reading you can see the conflict of interest and it is very strong. we have had new entrants over the past year and we

have had to. smaller entities find a way to create a niche. they may specialize is essential role areas we also look if there is another business model to be supportive of there's also a subscriber model where they actually pay for the rating. the amendment asks us to look at of there should be self regulatory agencies to select the retainage agency for each structured product transaction say you break that bond between the

issue -- insurer -- in short of the rating agency itself. the congress will weigh the cost and benefits and practical implications to see is some may make sense. have had new entrants we will continue as it will be an appealing place. >> one more question. >> the sec and the front line of the regulators of our markets with ourselves interred narcissism but it is agreed but even before that to regulate them markets our tiny agencies going against massive

markets just tsai eight -- short of 700 trillion not even that technology and other wise but we have $200 million budget and it seems to me one of the big problems we have is to defund the agency's. you don't have the resources and neither does the cftc. i know you cannot say that so neat and will not ask you to comment but anybody who cares about the capital markets like tv diamond says he is should be advocating for more money for the agency's. you cannot do that. others can. leave aside your budget request and constraints come theoretically if it had the budget it needed what would that budget the?

your term is coming to an end. [laughter] it would put in context of what you really need is people who care should focus. >> every year we do submit a budget we think we need to do the job. we frequently do not get that number because of the budget process. we are open and honest what we need to do if we don't get that what we will not be able to do. in my almost four years we have invested heavily and thin technology because that was in the dismal state but now we have capabilities the agency never had before. people say you don't need that many people but throughout my entire career technology allows you to

work smarter and better and more efficient but does not diminish the need for people because you find more things to look for insider trading and market manipulation and analyze cdo's and how there structured. we do put a heavy emphasis on technology week the to continue to invest in our people. reaction label to grow the last couple years. but not enough. i cannot give you a member with an agency of just under 4,000 with broad responsibilities from accounting standard oversight to money-market funds and mutual funds to market structure and we read about issues everyday to broker-dealers and at interact with

customers, reading agencies and transfer agents. an extraordinarily broad scope of responsibilities and now heads funds. we need sufficient funding to keep up and keep even so we can evolved as quickly as the industry can to those that are systemic and impact individual and investors. we will continue to fight like crazy for additional funding. we got very close to self lending. they don't go to congress and we live with it. we are not funded by the taxpayer is matched funding that means cutting the ftc budget does not mean the

money can go anywhere else. if you cut our budget you cut expenses all street. we think it is a great step to self funding but the real answers to establish what it needs to fund itself to get the job of -- done. thank you very much. [applause] >> mary schapiro thank-you very much with your ongoing work of dodd/frank. we appreciate your long service to law school as well as public-service. a small token of our appreciation we hope that you will come back. [applause]

>> we will reconvene later. >> these are houses that are

never coming back. one family every 20 minutes is moving out to. >> there disappearing from the landscape. >> 90,000. >> 164 firefighters were laid off with the downsizing and the effort to get the finances under control. firefighters has the highest case of arson in the country they have been laid off. two weeks later 100 are rehired. where the money came from is the department of homeland security has a fund. i do not want to overstate

but that is something you want to think about. the department of hand -- romance security had to step into keep detroit safe for the moment. i wonder to recede the auto industry bailout are we heading into the era of bailout for cities? is it gave failed citi?

>> good morning. i am honored to be the moderator of this distinguished panel and of this debate. good news is the only don't compete with monday night football. [laughter] let me take a couple minutes to set the stage. the dodd/frank act landmark legislation has promote -- provoke more controversy since the impasse and even before it was passed. 2010 it was the pretty easy call going into the 2010 election cycle because public opinion poll polls overwhelmingly seem to demonstrate americans had vivid awareness the implosion of the economy was

nearly averted from the infusion of capital from trillions of dollars of guarantees of liquidity. and a crisis was caused by a combination of risky and abusive wall street practices and government policy and oversight. when the dodd/frank act was born and in so doing every major provision seems they have not even been implemented seem to generate controversy whether it consumer rated show protection bureau comment to big to fail policy, is given the game rule, the volcker rule, the absence of gse reform. the signing shows the

beginning of vigorous debate about these provisions. want to read a few quotes from those who have waited most notably president obama and governor romney october 3rd. romney. every three economy has good regulation at the same time it can be excessive. the dodd/frank has a number prohibitions with unintended consequences that are harmful for the economy and killing regional small banks five would repeal and replace it. >> president obama it is because of reckless behavior on wall street putting mean street address we had to step and nfl since the 1930's so the question think we have to much oversight? senator warner of virginia, congress never

gets it rice with massive reform legislation the first time through. you head out then you come back to do it correctly. secretary of treasury tim geithner. >> with strong defense of the dodd/frank act. remember the financial crisis of 2008 you read of the hundreds of millions of dollars being spent on lobbyist to repeal financial reform. they're not perfect but in place would have limited the financial crisis. basel iii capital and -- requirements and burdens were intended for our big banks would effectively put community banks out of business. interestingly enough former city group executive sandy weill interview on squawk box we should split up

investment banking have banks be fed deposit takers have banks not risk the taxpayer dollars for those that are not too big to fail. sheila bair recently concluded the law clearly establishes a framework that allows financial firms to fail while preventing a broader economy and ends two big to fail. finally we could be spent all morning with mats quotes but lot of them have better words. i will conclude the system

has become too complex for people to make the mistake of thinking it means the end of the discussion when it is just the beginning of a war. the question is on the table. too little? to much? just write? >> it is a great pleasure to be here john and r&d gw law community for giving me the opportunity to be on this panel with these members with a variety of of points of view. good dodd/frank act went too far?

while much is still speculation sums says it is already in the act to about the efficacy of the dodd/frank act. in the summer of 2008 with the enactment of dodd/frank following the worst financial crisis since the '30's, the federal reserve and other financial regulators asked congress for three types of tools to address one fend off incidents that would threaten or harm stability. first we asked for a third stage authority to take the financial system into account and beyond the traditional safety and soundness. second we asked for action

by congress to fill in the gaps with the framework established from the regulatory system to cover parts that were not covered to allow from the shadow banking system. and for the war did not -- unwinding of the failing firm outside of bankruptcy. dodd/frank tried to address these request. the dodd/frank act has enhanced supervisory authority. in particular section 165 requires more stringent standards be applied to a golding company is that are imported from the stability

oversight council. capital, liquidity, stress test, risk-management counterpart be exposures and resolution planning and more. what is new? the legal and supervisory basis is financial stability. will already had standards focused on the safety and soundness of individual firms. but now given authority to consider those areas and individuals firm bond stability are an individual firms that use to mention higher look at those standards. extended the standards as

supervision it began to fill the gap post the risk to the financial system. another area that congress provide did help with the financial stability of acquisition and us sizable acquisition and designated. congress granted authority to break up large firms if they would pose a grave threat to among other things. they focus on the size and structure to limit expansion are required divestitures not safety or soundness but financial stability.

they are still fleshing out the framework for purposes of these provisions. clearly size will matter. but that alone is too blunt in of the approach. the agency's park considering interconnected this, and their services, complexity and foreign operations to resolve in a play that is not disruptive. factors to indicate it is vulnerable to financial stress from outside its walls. there is more to do but we have begun the task. dodd/frank expanded authority to identify the

examination and process that pose a threat to to financial stability. they can use their most powerful tool to understand how it works as well as bank holding company is better already subject to supervision. i point* out to an early remediation authority that allows the agency's to increase price three attention and require improvements as a decline in financial health and other than the capital of the organization. beyond the capital position. they will all have a cost and any adjustments. the agency's are doing their

best as best we can but as senator warner mentioned we are going to come back to revisit as time goes on. it is hard to eliminate unintended consequences from the start. dodd/frank respond -- responded to the second request of gaap supervision for the oversight council which is the collection of all the regulatory agencies to oversee imperious parts plus a federal offense of insurance. they are charged with monitoring the financial system recommending to member agencies to address

risk and steps to congress to fill gaps in the system and the functioning of the system. to designate the non-bank firms that live in the shadows among other thing is. it has published a number of reports and studies and it has published guidelines guidelines, how it thinks about financial stability and has begun reviewing large and complex firms and has begun to make recommendations to congress. networks in a way that dodd/frank addition to. third comment establishing a

mechanism that poses a risk as an alternative to bankruptcy, i will leave it to rick as the expert in that area. i'd like to talk about where dodd/frank did send it is built on the modern model to prevent a new joke crisis. the government supervision is necessary to monitor and offset the extreme with self regulation of a capital list society built on the jt's government must impose discipline with a have the incentive to have the rest that could have potential harm to society generally. neither guard regulation

will assure there is no financial crisis again. but the question is if we are prepared to look at the cost and benefits. the dodd/frank act as a cost was greater regulation that will affect how businesses run and how they provide services and the cost. but whether it creates a safer system that we would have without dodd/frank. i believe it has the potential to reduce the cost to make a safer system if implemented wisely priam quite humbled by the idea we could never prevent all financial crisis. look forward to the discussion and enlightenment from different points of view. [applause]

>> good morning. of pleasure to be here to discuss this topic. it will not surprise you that i hardly agree with sheila bair's position that dodd/frank as ended. before addressing title one and title to a light 2.out there are other areas of slow that increases your insurance coverage at $250,000 produce should rethink fall for that as well. [laughter] surely after the statute was enacted we have two titles

year for of number one with the largest make holding companies bidders subject to heightened supervision. this requires these companies to submit to resolution plans are living wills to demonstrate how they will be resolved under the bankruptcy code. last september the fdic under section 165 of the act the first plans have been filed by nine institutions and already but under regulation the second sent is due july next year. the first one is between two

1/5 p billion then at the end of the year be will get between 50 and $100 million. we have already reviewed the first set of plans for complete list -- mess and communicating and doing credibility reviews. if we don't find the plans to be credible, the company can be required to submit a revised retailed plan. if it does not meet the requirements we could have stricter requirements. and the fdic also house to agree. with the company fails to put a revised plan within two years and consultation with the a company to divest certain assets said war

operations. they also put into place that are $50 billion or more. but there is subject to the fbi acted and we require them to show it to be done with the least cost manner which happens under our statute. the resolution plans with the complex institutions. they allow us to refine and strategy's under title to. some under title to do, but to fail where we enter into

resolution, again, we have a high and supervision by the fed which avoids us getting into a situation where this house to be implemented. during the recent financial crisis will lacked the authority under the resolution to either choose between bankruptcy or bailouts. and your dodd/frank it is the preferred option. bankruptcy remains the first option. we only turn to title ii give the bankruptcy code would have the adverse

systematic effect on the entire financial system. the title goals are to liquidate in a matter -- manner to minimize risk and a moral hazard. the statute prevents any taxpayer bailout, a liquidation of process is the place and insurers taxpayers to not bear the cost. also those third parties who are responsible are held accountable. how does this work? for the fdic to be appointed we have to have the recommendation a termination and expedite did judicial review process similar to the systemic authority from

the last crisis which is thought we would never use in my lifetime. it is amazing. has a supermajority from the fdic to determine the risk. the super majority of the federal reserve board made to the secretary of treasury consulting with the president of united states to make it a point* and if we do with the broker-dealer then this the sec but the largest insurance companies are the federal insurance office. secretariat treasury house to make seven specific findings to support the resolution. default or in danger of

default. also the recommendations have to indicate to the failure of the company for it to change the stability of the united states. i will not go through all seven. you can lead to the statute. once that this made they can consent. if they don't consent there is the expedites bid process for immediate judicial review. the court has 24 hours after

receiving the petition. of a does not act is effective as a matter of law. the decision to appoint is not subject to state. appointed the authority is similar to dealing with financial institutions. similar to the superpowers to resolve financial all institutions in the nation's financial system. some include the ability to create a bridge bank and stay litigation, a claims process, this statute imposes losses on shareholders say could be

terminated as a result. it provides also liquidity from ordered eight -- early liquidation to allow us to sustain critical assets. the fund is established within the treasury department. at the time the receivership is formed. the statute% -- prohibits any taxpayer loss arising from the resolution under title ii. they can be borrowed from that fund but there from the assets of the failed institution, from fallback for those are responsible and is necessary for the assessment on the industry.

we will do is the orderly resolution authority part to 380. the final rule july 2011. that provides for the payment to creditors to continue pulling back from executive offices and all the other tools. in june we issued as a joint final rule concerning the maximum of obligation that clarifies the limit that we can issue but it took just

this month we are evolving enforcement of subsidiaries by the fdic as receiver. it basically provides in the middle of solvency they concentrate. but in order to maintain a services and value of the institution. this is critical to one of the methods we look at called single point* of entry. to allow us to continue at the subsidiary level. we've created the advisory committee, 19 members, prominent

individuals, a bunch of folks and they meet periodically to provide discussion on them broad range of issues. we have held roundtable is and that processes helpful as we continue to evolve. let me talk about one possible resolution strategy talking about under title ii as the single point* of entry. it is the preferred approach is there is no company in a position to acquire the failed institution where the acquisition has the increased concentration of risk. we have large institutions that gets more of but

concentration of assets which frank tries to avoid. with a speech at the federal reserve bank of chicago. i recommend that you looked at that for more details. we would be the appointed receiver of the parent holding company following the company's failure going through the appointment process. immediately following a bridge financial company would be formed the newly

formed a bridge company will continue to for form. then to minimize with the spillover effect of for them to continue to maintain their operations. the bridge company has access soviet orderly liquidation fund to provide liquidity for the company is including the operation of the solvent subsidiaries. by the completion of the process of ngc bay combination of cash coming equity and new debt to. it has the advantage to

return to part with of would put on the heathers that has spent but in the recent financial crisis there is a increased awareness to how these companies operate across national borders. obviously resolution has to be coordinated. >> not to resolve that we

need to do vance planning and coordination between counterparts remade the debt to give efforts to identify to move whom -- overcome to resolve this. the single point* of entry approach could take away cross-border obstacles because they seem to remain open and operate. but the fdic and other authorities have more races management group's and date auspices of the board the crisis management groups are intended to enhance specific planning for future

resolution and the gauge with meetings and dialogs. we're actively working on a bilateral basis with jurisdiction of key u.s. firms. our initial work we have made substantial progress but how would be treated against existing law and we've now work on a cooperative basis to overcome those but to

associate these with the recent crisis retake these responsibilities seriously. we're ready to use those maturities when needed. hopefully not. while the key provisions are now someplace we continue to diplomat the remaining provisions and refine our thinking on the process and certainly think you all very much. [applause]

>> now for the downside. [laughter] i want to thank the professors for organizing this. it is an excellent panel. i'll is enjoy being on the panel with scott and rec. we will have an interesting discussion. [laughter] but 36 bank-holding companies labeled liable to create instability if they fail for a vote in addition

but today is a day the end known but it could create instability. what does it mean when congress but to disclose and 10 -- institution that they are too big to fail. metal very worried now we have made it worse by embedding it in the statute to permit the fslic to designate certain institutions and we understand the papers are in mind of large insurance companies that it is too big

to fail. what effect does at have? at a creditors' look at the institutions as much safer investments. once they're so designated they're supposed to be regulated stringently by the fed. we don't know what that means but it put out a regulation that would be the constituents. but we have not seen it in action. creditors would be divided because whatever means that they will take less risk than others better not regulated stringently. shareholders like the risk taking creditors don't benefit.

they would be happy to provide these institutions that lower rates than they provide to their competitors. there is a real danger these funding the vintages will make them superior to the others. from time to time we hear every bloody days to remedy is objecting to be treated that way. that must mean it will not provide a benefit. it does. the fact they are objecting comes from the fact they are under the control of the federal reserve and almost every business does not want to be under control of any other organization. of the fed needs to control

their leverage, of liquidity, a capital, activities, all in the interest to prevent them from taking risks. when your company is turned over the answer is use stop running your organization. they all want to avoid that. the danger i see is this creates too big to fail that was ambiguous as in the past but now imbedded in statue. another similar problem, the secretary of treasury can seize any company. a financial company.

following the process for the court to review. but it will turn down the secretary of treasury is highly unlikely. these institutions will be turned over immediately. what happens then? the fdic has this already two bail-out the creditors. there is a lot of language that suggest they might not do it but if you borrow a substantial amount in the tertiary come up 100% of the value of the assets you can use the funds immediately to bail out the short-term

creditors to keep them from running. of the event is to make sure the short-term creditors are not afraid their institution might also be seized by the treasury secretary. so you will be taken care of. you don't have to run. there reduces the panic. i expect if we have another financial crisis which is unlikely, that is the way to make it less likely and create a panic of the financial markets we had before.

looked the way the act has developed it is widely off the track to becoming a train wreck. look at it this way. counting up all of the regulations made by various agencies and in the act act, about 250. 1/3 and have been finalized since the act was passed. 1/3 have been proposed but not finalized and one-third have not been proposed. the volcker rule is a great example.